Trademarks

As the craft beer market continues to expand in popularity and threaten the market share of older “macrobrewery” giants like Molson Coors and Anheuser Busch, courts have seen increased legal disputes in the beer industry as brands fight for both their independence and the attention of consumers. Most recently, Molson Coors has been sued in federal court in San Diego by Stone Brewing Co., one of the oldest and largest independent craft brewers in the United States. In its complaint, Stone Brewing claims that Coors is infringing the “STONE” trademark by rebranding Coors’ sub-premium, low cost “Keystone” brand as “KeySTONE,” with a particular emphasis on the single word “STONE” in packaging and marketing materials. Because of this, Stone Brewing alleges, Coors is sowing consumer confusion between the two brands.

Keystone Rebranding Comparison from Stone Complaint

Unless there is a swift settlement, one can assume that Stone Brewing will make good on the threat in its complaint that it will move for a preliminary injunction in order to stop the sale of Coors’ “KeySTONE” branded products during the pendency of the lawsuit. A motion for a preliminary injunction is often a critical juncture in such trademark infringement lawsuits, and Stone Brewing will need to show that it will be “irreparably harmed” if the injunction is not granted. This showing has in recent years become more difficult, as courts no longer presume irreparable harm when the plaintiff shows that consumers are likely to be confused by trademark infringement, but rather require an additional showing of likely irreparable harm. “Irreparable harm” (also known as “irreparable injury”) generally means injuries that cannot be readily compensated by money damages, and since money damages are usually available for trademark infringement this standard presents special hurdles for infringement plaintiffs that can be difficult to overcome early in a case.

To show irreparable harm, one argument Stone Brewing will likely make is that its “premium brand” is being tarnished by confusion with Coors’ “value brand.” This argument is presaged throughout Stone Brewing’s complaint (referring to Keystone’s beers as “watered down” and “fizzy yellow offerings,” as opposed to Stone Brewing’s “bold” and “artisanal” products). The argument, which has been judicially adopted in relatively few cases, is essentially that the premium or niche brand is irreparably harmed by the association with the value, mass-market brand, which usually is of lesser quality.

Conkle, Kremer & Engel, which has experience in both trademark litigation and issues specific to beer production, distribution, and marketing, has succeeded in making this premium-vs.-value argument in federal courts in California. For example, in Moroccanoil, Inc. v. Zotos International, Inc. (230 F. Supp. 3d 1161 (USDC C.D. Cal. 2017)), a 2017 trademark infringement case with similarities to the dispute between Coors and Stone Brewing, CK&E represented the manufacturer of Moroccanoil Treatment, a luxury oil-infused hair care product sold in distinctive packaging. The defendant Zotos, part of a large personal care products conglomerate, had created a low-cost “value” hair oil product called “Majestic Oil” that, in addition to its similar name, used packaging that was a close likeness of Moroccanoil’s trade dress.

CK&E, in its successful motion for preliminary injunction, argued that sales of low-cost “value” Majestic Oil products would erode Moroccanoil’s carefully-built premium image. The presentation included evidence establishing that once a product is no longer perceived by consumers as “premium,” it is difficult or even impossible for the seller to regain that perception. The court agreed with CK&E and Moroccanoil, finding a likelihood of irreparable harm and granting a preliminary injunction against further sale of the Majestic Oil products.

Preliminary injunctions can be dramatic turning points in infringement cases. In Moroccanoil’s case, the court’s preliminary injunction prevented Zotos from any further sales, advertisement or distribution of its infringing products, and required Zotos to recall all of its infringing products already in the market. As could be predicted, the case settled swiftly thereafter and Zotos made permanent substantial changes to its product name and packaging to avoid infringing Moroccanoil’s intellectual property rights.

As the holiday shopping season reaches peak fervor and consumers seek out the best deals available on hot products, gift-givers are more at risk of purchasing counterfeit products of all kinds. Recently, news articles have warned of counterfeit Fingerlings – the latest “it” toy – along with fake versions of popular electronics, clothing, personal care products, and many other types of goods. Government bureaus like the U.S. Customs and Border Patrol regularly release holiday bulletins advising of the escalating volume of phony products entering the United States (for example, https://www.ice.gov/news/releases/buyer-beware-counterfeit-goods-and-holiday-shopping-season). Counterfeits are far from harmless. Not only are these counterfeit goods generally inferior to authentic products in both quality and safety, fake products are fraud, theft, and infringements of valuable trademarks and other intellectual property. Sales of counterfeit products can even be criminal.

As a consumer, what can you do to help ensure you’re receiving the genuine article? The most obvious method is to avoid unfamiliar sources and to buy directly from the manufacturer’s website or from an authorized retailer whenever possible. If buying on websites like Amazon and eBay (where products are often actually sold by unrelated third parties), it helps to make sure that the seller of the product is the manufacturer or Amazon itself, not an unknown third party. Often times, third party sellers do not have the ability or desire to properly perform checks on the goods they are selling, and in many cases the third party sellers never actually possess the products – when they receive your order they simply forward the product from a warehouse they have never even seen. While outlets like Amazon and eBay have some anti-counterfeiting policies and procedures, experience has shown that not every fake product will be screened out. Consumers should also check the price of the goods to ensure that it is not abnormally low, and examine the packaging and presentation of the product as depicted on the website to help determine whether the product might be fake or foreign-labeled goods. Compare the look of the product offered with the same product on the manufacturer’s website – if it’s different, that’s a red flag. Consumers should also not hesitate to contact the manufacturer if they suspect that they have received counterfeit or foreign-labeled goods – in addition to being the primary victims, consumers are often the first line of defense in the fight against counterfeiting.

As a manufacturer or trademark owner, what can you do when you discover your products being sold in an unauthorized channel, with risk of counterfeiting? Conkle, Kremer & Engel has extensive experience helping manufacturers and distributors to investigate and, when necessary, litigate counterfeit and other trademark- and intellectual property-infringement claims. CK&E attorneys are well-versed in the careful initial steps that should promptly be taken when sales of illicit products are suspected. If the seller is cooperative, litigation can often be avoided. But if the seller is not, that is a strong indicator that the seller has been selling, and will continue to sell, infringing products unless stopped through litigation. Whatever you choose to do, consult experienced counsel and decide on your course of action promptly – unreasonable delays can seriously harm your ability to protect your rights.

On August 13, 2017, Conkle, Kremer & Engel attorneys Amanda Washton, Desiree Ho, Aleen Tomassian, Heather Laird and paralegal Chelsea Clark attended Beautycon in Los Angeles, both to assist clients and to observe first-hand the latest trends in the beauty industry. In addition to the thousands of youthful fans and future beauty marketing gurus in attendance, more than 100 brands and over 70 “creators” were featured at the two-day festival.

An annual gathering, Beautycon serves as a space for beauty industry participants to interact with young fans. As the popular beauty ideal moves away from the conventional toward one that is more inclusive and identity based, with the help of a talented team of influencers Beautycon advocated for authenticity – a sentiment to which all attendees could relate.

Beautycon heavily emphasized the growing trend of using social media influencers and celebrity endorsements to connect with consumers. In exchange for a prized “like” on Instagram, many vendors gifted product samples or even full product lines. Beautycon exemplified the partnerships that are possible between beauty businesses and social media influencers. There were plenty of celebrities, “exclusives” and photo-ready backdrops on hand for influencers’ selfies and videos. There were a number of forward-thinking panels on social media topics, including using beauty-oriented social media platforms to deliver positive self-esteem and diversity messages. Beautycon demonstrated that connecting brands with social media influencers is rapidly becoming vital to the success of emerging beauty businesses.

For businesses, working with social media influencers involves a host of practical and legal issues and considerations. Areas of concern can include contracts, copyrights, trademarks, privacy, rights of publicity, false advertising claims, regulatory issues and even trade libel and defamation, among other issues. With continually evolving social media platforms and issues, it is essential that cosmetics and personal care products companies fully consider the implications of both their social media activities and those of the influencers they seek to help them promote their brands. CK&E attorneys are excited to participate in dynamic events like Beautycon to help their beauty industry clients meet their needs in the shifting landscape of social media. (And as the photos show, it doesn’t hurt to partake in a little of the fun, either.)

A Preliminary Injunction is a powerful litigation tool that can immediately stop a defendant from selling products during the litigation. Securing a Preliminary Injunction at the beginning of the case often brings a prompt settlement, as the defendant must decide whether to settle or to fight over the product packaging that it cannot sell.

Getting a Preliminary Injunction can be challenging because the plaintiff must show that it is likely to win the case, and that it will be irreparably harmed if the defendant’s products are allowed in the market while the case proceeds to trial. Recently, courts have made Preliminary Injunctions tougher to get by raising the standards for showing irreparable harm.

In Moroccanoil’s case, the Preliminary Injunction prohibited Zotos from selling its Majestic Oil products in packaging that was confusingly similar to Moroccanoil’s distinctive trade dress. Zotos is a subsidiary of Shiseido America. Drawing on its knowledge of the beauty industry, CK&E’s presentation of irreparable harm to Moroccanoil’s reputation proved effective – the Court found that continued sales of Majestic Oil products would erode Moroccanoil’s premium position in the hair care market as a professional brand. The Court’s Order granting Moroccanoil’s Motion for Preliminary Injunction is available here, and is published at Moroccanoil, Inc. v. Zotos Int’l, Inc., 230 F. Supp. 3d 1161 (USDC C.D. Cal. 2017).

On the heels of the Preliminary Injunction, the parties settled the case with Zotos agreeing to pay a substantial portion of Moroccanoil’s attorneys’ fees and to drop the confusingly similar trade dress of the Majestic Oil products. In total, the case was fully resolved within 6 months of filing, and the only litigation activity was CK&E’s Motion for the Preliminary Injunction.

Once again, Conkle, Kremer & Engel attorneys Mark Kremer and Kim Sim have been honored to participate in and contribute to the revolutionary Beauty Industry Market Access (BIMA) program, led by beauty industry guru Patty Schmucker of American Made Beauty. BIMA is a multi-day intensive domestic and international trade and business education program taught by leading health and beauty industry experts. BIMA participants focus on key principles essential to expand their personal care products businesses both in the U.S. and overseas.

Mark contributes to the BIMA educational program by teaching modules on domestic and foreign intellectual property protection and international distribution agreements. Participants are particularly advised about cost-effective methods of protecting their intellectual property internationally, such as international trademark registrations through the Madrid System, which can offer a centralized application process for trademark registration in over 90 countries based on a brand owner’s domestic application or registration. Kim adds her expertise in domestic regulatory compliance, including Prop 65, California Organic Products Act (COPA), Safe Cosmetics Act, California Air Resources Board (CARB) regulations and survey requirements, and federal and state Made in the USA regulations.

BIMA is sponsored by Universal Companies, which has been in the beauty industry for over 18 years and is an important distributor of more than 300 brands in the spa, salon, esthetics and massage market, as well as their own proprietary brands.

In partnership with the California Trade Alliance (CTA), access to international trade shows are available to companies that participate in the BIMA programs. BIMA participants can exhibit in the popular California Pavilion regularly sponsored by CTA at Cosmoprof Bologna and Cosmoprof Hong Kong, among the world’s largest and most important beauty industry trade shows.

As a follow-up to participating in the 49th annual Cosmoprof Bologna, Conkle, Kremer & Engel attorney Eric S. Engel authored an article for Beauty Industry Reports reviewing the event and its impact. The just-published article particularly focuses on California Trade Alliance’s California Pavilion and the two USA Pavilions. CK&E was the sponsor of the exhibitors’ lounge in the California Pavilion again this year, and it proved useful for the many meetings California Pavilion participants arranged with distributors and buyers, as participants maximized their potential by expanding international business opportunities. CK&E is glad to be able to continue its support and work with beauty industry members to grow their businesses internationally as well as in the U.S. We’ll see you next year, at the golden 50th annual Cosmoprof Bologna.

Conkle, Kremer & Engel attorneys Mark Kremer and Zachary Page attended the Annual Meeting of the International Trademark Association (INTA) in Orlando, Florida this week. The Annual Meeting is INTA’s largest event of the year in which intellectual property attorneys, brand owners and administrative officials gather to discuss developments and trends in trademark law in the United States and across the globe. This year’s Annual Meeting included discussions about rule changes for proceedings in the Trademark Trial and Appeal Board, the impact of TTAB decisions on later litigation, anti-counterfeiting strategies, enforcement strategies in online marketplaces and social media, and changes to international trademark prosecution systems.

CK&E regularly works with clients to identify and protect their intellectual property both in the United States and abroad, and participates in industry conferences like INTA’s Annual Meeting and others to stay abreast of the developing issues affecting the firm’s clients.

Cosmoprof Bologna came to a successful close on March 21. The overall show statistics are not available yet, but participants in the California Pavilion experienced brisk business. The California Pavilion this year expanded to two islands with 18 exhibitors, and booths were often crowded with interested buyers. The CK&E lounge at the center of the California Pavilion buzzed with deal negotiations, and CK&E attorneys Mark Kremer and Eric Engel were glad to be able to lend their assistance to help participants expand their global reach.

Mark Kremer and Eric Engel at the CK&E Lounge in the California Pavilion

Organizer Cesar Arellanes of California Trade Alliance commented that California Pavilion participants reported meeting or exceeding their goals for the show, expanding and strengthening their international business.

CK&E attorneys advise clients to prepare for major trade shows, particularly foreign shows, by verifying that they have taken all appropriate steps to protect their trademarks, trade dress and other valuable intellectual property, before problems arise. To help one well-prepared client, Mark Kremer successfully initiated an immediate takedown of counterfeit products being sold in another hall. CK&E attorneys attend major beauty industry trade shows to help protect clients’ brands, to keep current on trends, and to assist clients with the full range of legal skills needed to grow their businesses internationally.

The huge convention center in Italy known as Bologna Fiere sprang to life today with the opening of Cosmoprof Bologna, featuring the California Pavilion organized by California Trade Alliance. Conkle, Kremer & Engel sent attorneys Mark Kremer and Eric Engel to help clients and other beauty industry participants grow their businesses by expanding internationally. Once again this year, CK&E is proud to sponsor the Exhibitor Lounge in the California Pavilion, which enables participants to work, meet and discuss international business deals.

Thirty-five California Pavilion participants began the event with a dinner to share ideas and stories. The group was glad to be able to use the occasion to celebrate the special birthday of Emilio Smeke, of Daily Concepts and AfterSpa. The California Pavilion has the unique position of being the only State Pavilion in the Hall of Country Pavilions, with a choice position adjacent to the USA Pavilion. The prominence of the California Pavilion is a fitting tribute to the strength and growth potential of the California cosmetics business and the leadership of Cesar Arellanes and Jake Rubenstein of California Trade Alliance.

A motion for summary judgment can be a cost-effective mechanism to efficiently resolve issues in a case by asking a judge to adjudicate certain claims or defenses before going to trial. Success on a motion for summary judgment can also reduce costs and improve outcomes by pushing the other side to settle on favorable terms and avoid the uncertainty and expense of trial.

Moroccanoil, Inc. and Marc Anthony Cosmetics, Inc., ended a legal fight over their trademarks and packaging after attorneys from Conkle, Kremer & Engel prevailed on behalf of Moroccanoil in a battle of competing summary judgment motions.

Marc Anthony argued that there was no likelihood of consumer confusion between the trademarks and product packaging, and attempted to strike at the heart of Moroccanoil’s brand by attacking the validity of the trademark in the Moroccanoil name and signature blue and copper orange colors. Marc Anthony claimed that Moroccanoil had improperly obtained registration for a name that was a “generic” name for argan oil, and that Moroccanoil had no ownership rights in common colors used for its packaging.

Moroccanoil Product Line

In a ruling recently published in the Federal case law reporter, Judge Dolly Gee of the Central District of California denied all of Marc Anthony’s motions, and issued significant rulings rejecting Marc Anthony’s attacks. Judge Gee specifically upheld Moroccanoil’s registration of its name and found that Moroccanoil’s trade dress is distinctive and protectable. Judge Gee also found that the majority of factors concerning the likelihood of confusion between the brands pointed toward trademark infringement. The case settled after Judge Gee’s opinion, without trial.